Tag: higher education funding

The government has pushed consideration of proposed university reforms, including a 20% cut in funding, out beyond the election, until 1 January 2018 and it has ruled out full fee deregulation. It has released an options paper, to guide a consultation process, canvassing a range of alternative fee measures.

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The 2016 Budget also sees an efficiency dividend of $1.2 billion on legislated dropped but the Higher Education Participation and Partnerships Program has been cut by $152 million to $553 million over four years. The Office of Learning and Teaching has been abolished, with the resulting $18 million in savings going to TEQSA and the Quality Indicators in Learning and Teaching website.

The deferral of the university reforms, pending the outcome of a consultation process, is chimerical, intended to neutralise, as far as possible, university funding and student fee subsidies as an election issue. As quite clearly set out in the options paper, a re-elected Coalition government can be expected to enthusiastically pursue its agenda of reducing public funding to higher education and shifting a greater proportion to students, merely by means other than those originally proposed by Christopher Pyne.

As stated in the paper, in finalising legislative reforms the government will need to adjust subsidy and student contribution rates to meet the financial sustainability savings outlined in the Budget. Over $2.5 billion dollars in unlegislated funding cuts remain stubbornly on the books, despite having failed twice to pass the Senate in this term. The options presented for the next term, “dependent on other structural savings or expense measures adopted as part of these reforms” (which provides a little wriggle room as to the precise form of reform), are:

reduce the Government’s contribution by 20% on average, as first proposed in the
2014-15 Budget

a “small” reduction in the government grant per student, and a “small” increase in the maximum capped student contribution that institutions may charge, such that students and taxpayers contribute equally to the cost of higher education courses (on average).

Sounds a lot like the last plan, with the meaning of “small” being in the eye of the beholder.

In giving universities the “flexibility to innovate”, the paper refers approvingly to the notion of “flagship courses”, as originally proposed in the report of the Review of Base Funding in 2011. Under this scheme, universities would be:

….given the freedom to set fees for a small cohort of their students enrolled in identified high quality, innovative courses. This would deliver the benefits of differentiation, excellence and innovation among universities while giving certainty to all Australians that they could still access fee capped places.

As to non-flagship courses, while fees would not be fully deregulated, they could be partially deregulated by a substantial lifting of caps: and it would need to be substantial (50% or more?) to allow for the emergence of the innovation and differentiation between universities which purportedly drives this reform agenda (rather than budget issues).

Still, blessedly perhaps, graduates are certain to have somewhat more time to pay down their student debt. The consultation paper presages changes to FEE-HELP, including dropping the repayment threshold from around $54,000 to something in the range of $40, 000 to $45,000. There’s also some likelihood of the introduction of a hefty loan fee. The paper notes that, currently, HECS-HELP loans have no loan fee, while FEE-HELP undergraduate loans and VET FEE-HELP loans attract a 25% and 20% fee respectively. While the government has previously proposed to remove the loan fees to create a level playing field for students and providers in all sectors, the paper notes that “charging a loan fee for all loans would provide an efficient mechanism to help defray the costs of running HELP”:

….a loan fee of 20% as currently applies to VET FEE-HELP would enable the Government to recover most of the costs associated with debt not expected to be repaid. It would similarly provide for greater equity and reduce the cost pressures for undergraduate FEE-HELP students but with a greater increase in costs for students in Commonwealth supported places.

The 2014-15 Budget proposed a number of measures to expand opportunity and choice for students, including the extension of Commonwealth support to all undergraduate courses at all registered higher education providers and the uncapping of places in sub-bachelor courses at public universities. While these reforms are still provided for in the Budget, extension to non-university providers is seemingly off the agenda, “noting that growth in enrolments has continued to increase at non-university providers despite the absence of Commonwealth funding” (which won’t matter as much, if at all, if a loan fee is introduced for FEE-HELP and fees hiked). It’s also looking that uncapping places in sub-bachelor courses is unlikely in the near future.

The government is appointing an expert panel to advise it on reform options.

20% cut to funding likely

The government remains committed to a higher education funding reform with university students increasingly likely to pay more for their degrees, Education Minister Simon Birmingham has confirmed.

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Birmingham told Sky News on 4 April he wanted to “refine and improve” the original plan by former minister Christopher Pyne.

“The growth in higher education spending over the last 20 years has essentially gone at double the rate of growth of the economy, so that is not a sustainable financial trajectory,” he said.

He said the original 20% cut had only ever been “deferred” for 12 months:

This is not just a funding cut — it is a reform program. We are not taking away from universities in terms of what they overall have to spend but there is an argument to say you need to have a look at the balance of what students contribute and what the government contributes.

He said Australia had one of the most generous student loan schemes in the world.

Birmingham flagged a change in government-private contributions at the Universities Australia conference one month ago, with vice-chancellors and analysts predicting the 20% cut proposed by Christopher Pyne in the 2014 budget would go ahead, but fee deregulation would be abandoned in favour of a change in public and private contributions. Some have also suggested an increase in the overall total charge could also increase to help boost university coffers.

The Commonwealth government has released a synthesis report of the past seven reviews of higher education over the past 30 years rather than conducting a further separate review in the wake of its failed higher education reform package.

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Education minister Simon Birmingham told the Australian Financial Review’s Higher Education Summit said that the government is under intense time pressures to come up with a new and revitalised higher education reform package after its the package devised by former education minister Christopher Pyne was rejected by the Senate twice, largely due to intense community opposition over the plan to deregulate university fees.

The background paper summarises the findings of each major review of higher education from the 1988 Dawkins White Paper to the 2014 Kemp-Norton Review of the Demand Driven Funding System.

Birmingham said he had decided to reap the wisdom of these previous reviews rather than hold another one as he tries to push reset on the government’s failed higher education reform package.

These reviews show that for almost three decades Australia has been grappling with how to enable more students to access the benefits higher education offers – in terms of employment, earnings, social and cultural opportunities – while ensuring the system remains fair, high quality and affordable for both individuals and taxpayers.

He says he hopes to have a new reform package ready to take to the Senate by mid-next year before the expected date of the next federal election.

Birmingham flagged to the conference that a watered-down version of fee deregulation was still on the agenda, but acknowledged that Labor ran an effective campaign over $100,000 fees. He also flagged a possible overhaul of the HECS system and expansion of sub-degree places, saying “there is a valid need to stop treating non-degree bachelor and non-university pathways as second class options”.

While he will look closely at extending government subsidies to private colleges because it would encourage diversity, Birmingham said he is very wary after widespread rorting in the vocational sector.

He said quality must be guaranteed and government funding must never be structured in such a way as to attract providers like bees to a honey pot,”adding that he had been “somewhat scarred” by his role in having to “clean up in the poorly regulated vocational education market”.

The synthesis report identifies five overarching themes that had been common to all seven of the previous reviews even though student numbers had more than doubled during that time, now numbering over one million.

Common themes included how to adequately finance teaching and research while maintaining quality, as well as finding the right balance between student and government contributions have been central to all seven reviews.

Each of the reviews has also struggled with how to continue to expand the number of places, especially among under-represented groups, due to the need to produce graduates with the skills needed for new and emerging sectors in the economy. All have also addressed diversity, or the lack of it, between institutions.

Research programs take a hit as universities and students left in policy limbo.

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Universities have welcomed a number of positive measures announced in the Abbott government’s second budget but have expressed deep disappointment at cuts to research program and the level of progress made in providing much needed higher education funding and policy certainty.

“An additional year’s funding for the National Collaborative Research Infrastructure Strategy (NCRIS) ($150 million), one year’s funding of the Australian Synchrotron, and $16.9 million over four years to improve initial teacher education are the brightest budget beacons for universities,” said Belinda Robinson, Chief Executive of peak body, Universities Australia.

Further, reports that the Minister for Education and Training intends to announce a ‘half round’ of funding for Future Fellowships in coming weeks has been well-received by the sector.

However, the $263 million cut to the Sustainable Research Excellence (SRE) program that assists in meeting the indirect costs of research, identified to pay for two years of NCRIS, has come as a severe blow to the sector.

“Given the magnitude of the contribution to fiscal rectitude already made by the sector in recent years, and the number of non-university users of NCRIS facilities (including business and state governments), there can be no justification for the financial burden to be borne exclusively by universities,” said Ms Robinson.

This reduction comes on top of previous and substantial cuts made to research block grants over the past three years. In 2012, $500 million over four years was stripped from the SRE program. This was followed by a further reduction of $150 million through the application of the efficiency dividend to all research block grant programmes announced in the 2013-14 Budget and a cut of $170 million to the Research Training Scheme in 2014-15.

“These cuts not only negatively affect universities with established research profiles but also those who depend on this funding to continue to build their research capability,” said Ms Robinson.

“Against the backdrop of low commodity prices and the downturn in traditional industries, a prudent approach to stimulating economic renewal is to invest in, not cut, wealth-generating activities like higher education, research and innovation,” said Ms Robinson.

Universities continue to express strong opposition to the proposed 20 per cent cut to funding for teaching and learning announced in last year’s budget. “Funding higher education is an investment in Australia’s future productivity and prosperity. It makes no sense to reduce the level of public investment in university education when Australia already sits close to the bottom of the OECD for the level of public investment in tertiary education as a percentage of GDP,” Ms Robinson said.

Universities Australia has also expressed disappointment at the $5 million cut to the Higher Education Participation Programme (HEPP) which assists disadvantaged students to realise their full potential.

Shifting successful and innovative programmes that promote and reward excellence in learning and teaching from the Department of Education’s Office of Learning and Teaching to the university sector will leave these programmes worse off but will undoubtedly lead to new innovative ideas and approaches,” said Ms Robinson.

“Transferring the responsibility for encouraging and promoting greater Indigenous participation in higher education from the Aboriginal and Torres Strait Islander Higher Education Advisory Council to the National Aboriginal and Torres Strait Islander Higher Education Consortium, should not result in any erosion in commitment by the Government to Indigenous higher education.” said Ms Robinson.
In noting the lack of progress through the Parliament of the government’s Higher Education Research and Reform Amendment Bill 2014, Ms Robinson expressed concern about the ability of universities to advise those considering enrolling at university in 2016.

“For 12 months, universities and students have been in a holding pattern of policy uncertainty. In the interests of students having the information they need to make one of the most important decisions of their lives, the future of the bill must be addressed as a matter of urgency,” Ms Robinson said.

“The ability of universities to drive much-needed national economic and industrial renewal is being hampered by the absence of a long-term plan for higher education and research.

“It is beyond time to stop treating higher education and research policy as a political punching bag and for the Parliament to agree a consensus bipartisan approach that puts long-term student and national interest ahead of all else,” Ms Robinson said.

Seeking coherence in tertiary education

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The federal government’s proposed higher education reforms failed spectacularly in the Senate again last week. Before the government tries a third time to secure support for a policy that has been difficult to sell, Swinburne University vice-chancellor Linda Kristjanson writes that the government needs to learn from past mistakes in the tertiary education sector and think carefully about how to move forward.

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Australians rejected deregulation because it wasn’t fair for all

The debate has advanced since the government’s proposed changes to university funding were first unveiled in the 2014 budget. The public is much better informed about the systemic underfunding of Australian universities.

It is also much more widely accepted now that fee deregulation of the kind proposed is likely to result in significant fee increases for students. The architect of the HECS system, Bruce Chapman, has consistently argued this throughout this long debate.

The potential for the proposed policy changes to be highly inflationary was evident immediately upon the unveiling of the package last May, when I wrote:

We do not support full fee deregulation for Australian undergraduate degrees. Full fee deregulation will inevitably lead to much higher fees for our students […] Our system of higher education should continue to encourage fees which are not out of reach for those capable Australians who aspire to university study.

Since that time, my university has made a number of contributions both to the public debate on fee deregulation and in the legislative process, warning the combination of uncapped pricing and unlimited HECS loans would be a recipe for significant price rises.

While the media often reported that vice-chancellors were “united” behind fee deregulation, a closer examination of the statements of many university leaders shows that this was not the case.

Though it might help, one didn’t need an economics degree to understand the potential for big price rises in a totally deregulated higher education market underpinned by generous government loans.

This helps to explain the public’s visceral reaction to fee deregulation. Higher education is strongly valued by the Australian public in a country that takes pride in giving everyone a fair go.

The public dug its heels in because it wasn’t at all evident that change of the radical kind proposed by the Australian government was either warranted or required. It is not surprising that crossbench senators listened and responded in the same way.

De-regulation for universities but re-regulation for vocational education?

We need to take a step back from the higher education debate and look at what is happening in vocational education – the other half of Australia’s system of tertiary education, which often commands less public attention.

It should not escape anyone that, even within the last fortnight, the federal government has been moving rapidly in two very different directions within the tertiary education sphere.

Education Minister Christopher Pyne has been pushing with incredible force the deregulation of higher education, with the total removal of fee caps for undergraduate degrees, the creation of unlimited HECS loans and the decision to open the gates to 130 private providers to compete alongside Australia’s 40 universities for public funding.

Meanwhile, Assistant Minister for Education and Training Simon Birmingham has been working just as forcefully to rein in the atrocious and exploitative behaviour of hundreds of private vocational education providers. These have been rapidly draining money from the public purse by taking advantage of generous HECS-style loans to lure students into overpriced VET courses.

Some of the stories of the students who have been squandered their education entitlements and been left in debt through the sharp marketing practices of these for-profit operators are incredibly sad. It is a national disgrace that we have let our VET system reach this point. I give credit to Birmingham for the action he is taking to restore some integrity to the system.

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Can we learn from the mistakes that have so clearly been made in the deregulation of vocational education to inform how we proceed in higher education? We should not be furiously re-regulating in one domain just as we are trying to radically de-regulate in another.

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This is why I agree with the call by the Business Council of Australia last week that we should lift our eyes above the silo of higher education to take a broader look at how vocational and higher education work together.

This is not to say that such a review will lead to the creation of a unified system of tertiary education, nor should this be the goal. However, a more comprehensive examination of the links between the two systems would be sensible. It is time to consider the contributions made by VET and higher education and to examine the policy settings that are most appropriate to support quality outcomes in both sectors.

The policy settings we determine must ensure that current and prospective students have access to affordable, quality education. This principle is the touchstone that we must use as the basis for any reform, remembering that the decisions we take will have lasting consequences for Australia’s future.

With the Higher Education Legislation and Financing Working Group having delivered its advice to the government on extending public subsidies to student places at non-university higher education providers, the speculation is that it will be proposing a considerably lower rate for these providers and for sub-degree programs. The Australian Council of Private Education and Training (ACPET) isn’t particularly happy.…………………………………………………………………………………………………….…

A review of budget documents by The Australian indicates that if the higher education reforms announced in the Budget are implemented, undergraduates can expect to attract an average of about $4950 a year in commonwealth support. But this drops to $2990 for diploma, advanced diploma and associate degree students.

The figures suggest the government means to protect itself from a budget blowout as diploma students, traditionally funded by the states, shift to commonwealth-funded pathway programs. The Labor government addressed similar concerns by excluding diplomas from its demand-driven funding system.

Separately, analyst Gavin Moodie says that students in the field of “society and culture” will have a subsidy of $6,021 in universities, but estimates that, on the information available, a subsidy of $4,275 in the same field at a non-university provider would be a reasonable estimate.

The rationale for such differentials would be that non-university providers don’t have to bear the costs of research and that sub-degree programs would take place in non-university settings (including university foundation colleges).

Tertiary education expert Leesa Wheelahan said it would be counter-productive to fund sub-degrees at a lower rate. She pointed out that students who should be undertaking these qualifications are often less prepared to undertake full degrees:

Part of the reason for doing an associate degree is that classes will be smaller and pedagogy more supportive. It doesn’t cost less to teach like this. It costs more.

Moodie said the move would motivate universities to discourage students suited to sub-degrees from enrolling. But policy consultant Brendan Sheehan questioned how much Commonwealth funding rates would matter once higher education fees had been deregulated. He said there is no certainty that the government would make the change anyway, given the “rolling contretemps” such as the Senate defeat of the Coalition’s university savings measure.

Meanwhile, ACPET has accused the fee working group of bias and self-interest , dominated as it is by universities. There are seven university representatives on the group including six vice-chancellors, with just two from TAFE and one from the private sector.

Universities argue that at universities, commonwealth student subsidies goes towards funding research and pursuing the “public good” and therefore non-universities should receive significantly less. The universities had proposed non-universities receive 60% of the commonwealth supported place subsidy, while ACPET is arguing for a rate of 80-90%.

We feel severely outnumbered and we’re not sure our voice is being heard appropriately. I don’t know why the university sector, which has a vested interest in keeping non-university higher education provider funding down as much as possible, should have a casting view here.